Josh Young

Speaker states if the Strait of Hormuz closure does not resolve soon, "we should see all-time high oil prices" on an inflation-adjusted basis, referencing 2008's $147 level adjusted to "$200 plus." The Strait carries 1/5 of global crude; Iran's blockade is effective with no quick diplomatic/military solution, causing the physical market price to ratchet up 5-8% per day. The physical supply shock is severe and enduring, with price momentum signaling a continued grind higher toward historical cyclical extremes. A swift political resolution reopening the Strait, or a successful military operation to secure the passage.

Small-cap US oil producers are more attractive than large-cap companies like Exxon because they trade at much lower valuations (EV/EBITDA, EV/BOE per day) and have no production shut-in exposure from the Strait of Hormuz. They can sell all their output at elevated prices, providing pure-play leverage to high oil prices.